A new ranking has identified the states that are the furthest behind in hitting recommended retirement savings benchmarks, and conversely, the 10 states that are closest to hitting those benchmarks.
No state’s residents are currently on track with savings, as the average state is over two-fifths (44%) short of where they need to be to retire.
Personal Finance Advice provider DollarGeek analyzed data from the Federal Reserve System’s Survey of Consumer Finances (SCF) and compared this to national recommended savings benchmarks, to identify which states are behind and by how much.
It turns out that no state is currently on track with their savings, as the average state is over two-fifths (44%) short of where they need to be to retire, based on the current cost of living.
Across the nation, the mean sum required to retire is $760,476, after Social Security income—whilst the latest FRS figures reveal the typical American has just $427,918 in savings.
And while no part of the U.S. is on track, some states are significantly closer to meeting their savings goals than others, as the recommended retirement sum for each differs based on the annual cost of groceries, housing, transportation, healthcare and utilities.
Hawaii currently has the highest recommended retirement sum at $1.8 million, while Mississippi residents can expect to retire after saving a comparatively modest $505,346.
10 states furthest away from recommended retirement savings
1. Hawaii: The Aloha State is the furthest away from securing its recommended retirement sum ($1,813,768), with the average savings balance standing at $366,776 per person—meaning there’s an additional $1,446,992 (80%) in savings needed to retire.
2. New York: Average savings balance of $382,027 is 70% short of its recommended retirement sum ($1,813,768).
3. California: Average savings balance of $452,135 is 63% short of its recommended retirement sum ($1,205,946).
4. District of Columbia: Average savings balance of $347,582 is 59% short of its recommended retirement sum ($841,967).
5. Massachusetts: Average savings balance of $478,947 is 57% short of its recommended retirement sum ($1,120,304).
6. Oregon: Average savings balance of $452,558 is 57% short of its recommended retirement sum ($1,062,020).
7. Rhode Island: Average savings balance of $392,622 is 57% short of its recommended retirement sum ($908,578).
8. Maine: Average savings balance of $403,751 is 54% short of its recommended retirement sum ($882,409).
9. Utah: Average savings balance of $315,160 is 54% short of its recommended retirement sum ($692,093).
10. North Dakota: Average savings balance of $319,609 is 53% short of its recommended retirement sum ($682,577).
10 states closest to recommended retirement savings
1. Kansas: The Sunflower State is currently closest to meeting their retirement target of $543,409, with the average resident holding $452,703 in savings according to the FRS—so there’s just a 17% shortfall.
2. Iowa: Average savings balance of $465,127 is 20% short of its recommended retirement sum ($583,851).
3. Georgia: Average savings balance of $435,254 is 24% short of its recommended retirement sum ($570,767).
4. Michigan: Average savings balance of $439,568 is 27% short of its recommended retirement sum ($600,504).
5. New Mexico: Average savings balance of $428,041 is 28% short of its recommended retirement sum ($596,935).
6. South Carolina: Average savings balance of $449,486 is 28% short of its recommended retirement sum ($627,861).
7. Alabama: Average savings balance of $395,563 is 29% short of its recommended retirement sum ($560,062).
8. Ohio: Average savings balance of $427,462 is 29% short of its recommended retirement sum ($600,504).
9. Texas: Average savings balance of $414,328 is 29% short of its recommended retirement sum ($610,019).
10. Kentucky: Average savings balance of $441,757 is 29% short of its recommended retirement sum ($621,914).
Speaking on the findings, a DollarGeek spokesperson said: “Although there’s no official guidance on how much you should be saving each year, these figures serve as a reminder that there’s really no minimum age to start putting money away and that every little helps towards achieving long-term financial security, especially in the current climate.
SEE ALSO:
• More 2023 ‘Best & Worst’ States for Retirement: New Ranking has Surprising #1
• 10 Best and Worst States to Retire 2023: WalletHub
Veteran financial services industry journalist Brian Anderson joined 401(k) Specialist as Managing Editor in January 2019. He has led editorial content for a variety of well-known properties including Insurance Forums, Life Insurance Selling, National Underwriter Life & Health, and Senior Market Advisor. He has always maintained a focus on providing readers with timely, useful information intended to help them build their business.
Thank you for sharing the article on the 10 states that are furthest from and closest to retirement savings benchmarks. It is alarming to see that many Americans are not saving enough for their retirement, and it’s crucial that people start taking steps to address this issue.
It’s not surprising to see that states with higher costs of living, such as Hawaii and California, are further from retirement savings benchmarks. However, it’s encouraging to see that states like Utah and Minnesota are doing well in terms of retirement savings.
It’s important to note that retirement savings is not just a personal responsibility, but also a societal one. Employers, policymakers, and financial institutions all have a role to play in promoting and supporting retirement savings. This includes offering retirement plans, educating employees on the importance of saving for retirement, and creating policies that encourage and incentivize retirement savings.
Overall, this article highlights the need for increased awareness and action around retirement savings. It’s never too early or too late to start saving for retirement, and every little bit counts. By taking proactive steps today, individuals and communities can secure a more financially stable future.